Plan Documents

[Guest SScannell]

I create plan documents (Benefit Summaries and Summary Plan Document/Descriptions) for a TPA. They take an inordinate amount of time (up to 40+ hours depending on complexity, # of plans, etc.) and I have three questions I'm hoping this audience can help me with.

1) I read an older post (5 years old) about whether software exists that would allow you to create a readable, accurate document in much less time than it's currently taking. Authoria was mentioned in the older post - do other options exist? Or do the majority of TPAs write their own documents (with legal help of course)?

2) How much (if anything) should we be charging for these documents? We have our own attorney review them so there is not only my time and salary to consider, but our attorney's review time.

3) If it's common practice to charge, would anyone be willing to share a ballpark figure with me? We are not currently charging for these documents and I think it could be a revenue source.

I appreciate any advice, suggestions, comments on the topic.

SScannell

[SheilaD]

We are happy using Fort William which is a very reasonably priced on-line service. You can either pay by the document or by the year for unlimited usage. We pay by the year. It takes me between 15 - 30 minutes to enter the plan information and specifications and all of the documents are generated instantly in Word. If you would like to discuss pricing, feel free to send me an email at sdott@northeastprofessional.com.

[J Simmons]

SScannell, you might find the following of help in bucking industry practice of not charging separately for plan documents. You could explain that by charging separately, not only are you disclosing the costs of a component service that your competitors are not, but also helping your clients avoid violating their fiduciary duties:

Questions for the Department of Labor Staff for the 2005 ABA’s Joint Committee on Employee Benefits Technical Session Held on May 18, 2005, at 10:00 AM (Unofficial, nonbinding DoL staff views)

Question 5: A plan’s benefit consulting firm/service provider is paid entirely through revenue sharing, the terms of which are fully disclosed. The service provider contracts to provide plan consulting/document service at no additional charge. In year two, the service provider provides consulting services relating to a plan design issue and implements the design via a formal amendment. Does this arrangement violate ERISA? Proposed Answer 5: Yes. The consulting service will be deemed to be paid via revenue sharing which in turn will be tantamount to paying such expense with plan assets. The ERISA violation occurs due to the fact that a settlor function expense, in this case the design decision, will be deemed to have been paid with plan asset in violation of ERISA.

DoL Answer 5: The DoL staff was skeptical as to whether the amount received by the service provider could represent no more than reasonable compensation for the services provided in year one, if that provider can provide the additional plan design and amendment services for no additional compensation. However, if that is the case, it is not violative for a service provider to provide services that are considered settlor in nature if it is not receiving additional compensation. On the other hand, if the service provider is either receiving additional compensation, or is reducing the other services it provides to the plan, then the plan design and amendment services that are paid for through revenue sharing based on plan investments would be deemed to be paid though the use of plan assets, and would constitute a violation. In the alternative, it is possible that the amount received by the provider in years in which it does not provide plan desgin and amendment services is more than reasonable, in which case the arrangement would not satisfy the conditions of section 408(b)(2).

[Guest SScannell]

Thank you - I really appreciate this! I will discuss with my attorney and others internally - maybe we can get some revenue from our hard work after all.